Episode #115 – Maximal is Not Optimal: The Secret For a Happier Life?

You're listening to the “REI Marketing Nerds” podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high-tech digital agency, focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition, and live a freer, more awesome life. And, now, your host, Dan Barrett.

Dan: All right, hello and welcome to this week's episode of the REI Marketing Nerds podcast. As always, this is Daniel Barrett here from AdWordsNerds.com and, of course, REIMarketingNerds.com, where you can find all the past episodes of this podcast, show notes and more.

Hello, how are you? I hope you are doing well. I hope you're having an awesome week so far, awesome year so far. [01:05.8]

As I'm recording this, I'm actually getting sort of…this is Q4 of 2020. As I record this, we are getting towards the end of the year. It's autumn here in Connecticut. The leaves are beautiful. Generally, when I come to the end of a year, I'm going to spend a pretty good amount of time retrospecting, if that's even a word. Is that a word? I don’t know, but I'm going to be thinking about what happened, thinking about what worked, what didn't. I'm going to be thinking about improvements I want to make. I'm going to be thinking about things I want to stop doing and things I want to get rid of. It's one of the most valuable things I will do during the year and it's really been a habit that has really transformed my life and transformed my business. [01:52.0]

Look, if I'm talking to you, that means you are a real estate investor. You are someone that is ambitious and you are driven, and you are a self-educated person, so I probably don't have to talk to you about goal-setting and all this stuff, but I do want to pass on one insight that I got from that process. So, this isn't going to be specifically about REI Marketing. It's not going to be specifically about getting more motivated seller leads online. If you want to do that, you can go to AdWordsNerds.com or, even better, go to MotivatedSellerLeads.com. You can jump on the phone with me and my team and we will help you do that for free. This episode is not going to be about that. All the other episodes are about that.

I want to talk about this one lesson that has kept coming up for me this year and specifically the last three or four months. Like I mentioned, real estate investors tend to have a certain number of qualities, right? They tend to be really hardworking, tend to be really motivated, tend to be really optimistic. They tend to be really positive. [02:59.7]

These are all incredible personality traits that are the foundation of why I think investors in general are pretty successful people, even investors who maybe they don't rate as one of the top 10 investors in the country or they're not doing tens of deals a year, even the ones that are operating on a much smaller scale, the people that do a couple of deals a year just to fund their retirement or create some extra cash or whatever, they tend to be really happy, well-adjusted people. They really do and I think that optimism is a huge part of that, and I like to think about myself that I share a good amount of that optimism.

If you asked me what next year is going to look like, I'm typically going to get excited about projects I'm going to undertake and things I'm going to try, and things I'm going to do, and I really get pumped up about it. Like I said, that is great. It drives me to try to achieve just like it probably drives you to achieve, but there is a downside to that optimism. There is a dark side to it. [04:05.7]

The downside is that when you are optimistic like I am like and you probably are, when you are optimistic, you tend to over commit, and this is why you tend to find yourself in a situation where maybe you're doing so much stuff that it feels like you don't have the time to do any of it particularly well or you're being torn between so many projects, so many rehabs or so many different parts of the business that you feel like you don't know where to focus or you feel like you don't have any downtime. You don't feel like you have any room to breathe.

If you've ever experienced this, you can know that it's this kind of low-level anxiety/tension/energy, and it doesn't always feel bad. I think it's what people who are outside of being entrepreneurial or owning their own business, people outside of this don't get this about this kind of situation that we all find ourselves in from time to time. [05:02.7]

It's that rush, that energy, that frenetic pace that we tend to fall into. It actually kind of feels good, right? It feels fast and exhilarating and fun, but stress and anxiety, even the kind that give you that jolt in the morning that you might get from drinking a really big cold brew coffee or something like that, that jolt of energy that you get, it's not the only mode that you need in your life.

Part of the problem that I run into and part of the problem that a lot of my clients run into—because, of course, I work with real estate investors all over the country, so my clients—or you, the people that listen to this podcast, but you, in particular, probably run into, one of the things that probably crops up for you is that, that frenetic sense of energy, excitement and exhilaration, and running all the time from thing to thing, project to project in place to place, over time, it can weigh on you. [06:03.4]

It can weigh you down. It can grind you down until there's not enough left to really be all the way present the way that you probably need to be present for your team or your employees or the sellers that sell to you or even your partner, or your family.

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Something I have to remind myself of is that, and I’m going to take this, this is a concept that comes straight from manufacturing, which may be a weird, weird pivot here in this conversation. [07:08.9]

This concept comes straight from the theory of constraints, which was a management process improvement methodology that came out in the ’80s, sort of in the wake of Honda and Toyota really disrupting the U.S. car market. The U.S. manufacturing companies were looking over at Japan and really wondering what they were doing that was kicking our butts, not just in cost, but also in quality, and out of that time period is where a lot of things like agile and lean and scrum, and these things that you've probably heard of if you have any interest in that space at all.

One of the things that came out of that was the theory of constraints, which is my personal favorite one, and this methodology actually applies to my life in many different ways and that's the podcast for another day, but one of the core concepts, sort of core principles you can pull out of the theory of constraints is that maximum output, maximum productivity, maximum, is not optimal. [08:16.8]

It's not optimal. So, maximal is not optimal, and what do we mean by that? It means if you have a car plant and the absolute maximum number of cars you can produce, let's say, in a day, I'm going to make this up, you can produce the absolute maximum of 100 cars a day. If everything is firing on all cylinders, you're redlining every single thing, 100 cars a day. That is not actually the best possible scenario, because when you operate at the maximum, when you push everything to their limits, you tend to get more mistakes down the line. You tend to get more defects. You tend to get more returns. [09:00.0]

So, the maximum number of cars produced doesn't produce the maximum amount of profit, and this is a thing that is very hard for people to understand that if your capacity, the absolute limits of your capacity is 100, you are not operating at your best when you are operating at 100. Your optimal point is somewhere less than that.

Let's bring this over to your life. If your absolute maximum capacity, let's say, is to do 12 flips a year, it is likely that you will not actually make the most money doing 12 flips a year because of cost overruns and budgeting mistakes, and having to hire a team and just stress, and, hey, medical bills, who knows? Maybe the optimal point, the point where you are making the most money, is actually 10 or even seven. [09:59.8]

So, productivity, getting a lot done, being optimistic, this tendency we all have to take on more and more and more, and push ourselves more and more and more, it doesn't produce the best result for your life. Obviously, we're not talking about cars. We could be talking about happiness or quality of life, quality of life for your family or your employees. We could be talking about profit, but maybe we're talking about longevity. If you knew that you could do two extra deals a year, but you were going to die five years earlier, would you do it? I wouldn't.

So, this idea, this idea from the theory of constraints that says maximal is not optimal, that is a concept I try to remind myself of every time I sit down and I think about, What projects am I doing and what am I working on, and what's important to me? because ultimately there are lots of things I could do, but just because I could do them, doesn't mean I should, and just because something might be maximal, doesn't make it optimal. [11:18.7]

I hope that makes sense. I hope that's of value to you. Listen, every single week, every single day I am posting in the Facebook group for this podcast. It's at REI Marketing Nerds on Facebook. Just go on Facebook, type in “REI Marketing Nerds.” I would love to have you. We really would. There are amazing investors in there sharing tips and tricks. I'm posting content in there every single day, free trainings, blog posts, all sorts of stuff. Come and join us. Go to Facebook and type in “REI Marketing Nerds”, or just tune in next week for this podcast.

Look, I can't tell you how much I appreciate you being here. I will see you next week. Have a wonderful day, and I’ll be talking to you very soon. Cheers. [12:01.7]

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